All Forum Posts by: Jose Rodriguez

I have been giving my tenants the bank account/routing number for years without an issue until now. Last year we evicted a tenant and yesterday I found a fraudulent charge from Direct TV. when I called the bank the tenant's name came up. Now I have to switch bank accounts and find a safer way to enable tenants to make deposits in the bank. We don't take checks or collect rent so it will be a headache having to switch everything now but the risk is there for anyone with your account number to setup a debit from your account so I suggest avoiding that if possible.

Deborah B. IT sucks to spend that much cash on a repair but when you have tenants occupying sometimes there is not enough time to get multiple bids on the work. Thanks for sharing your experience. I have some rental properties and I've actually removed the gutters from some houses because of the maintenance issues. Guess that wasn't such a great idea after all. Now after reading your post I better schedule some inspections to reduce the risk of costly repairs.

Thanks for your contributions. I understand I'm on the hook with the large amount on the loan. My question was geared more towards any regulations preventing me to deduct the interest as an expense on the LLC return, since the mortgage is under my personal name. A lawyer told me that I would need to inform the IRS before I can claim the interest under the LLC for a property titled and mortgaged under my name.
An accountant told me that there is no need to inform the IRS, as long as I'm not double dipping and that I could make that case to the IRS all day long.
I want to side with the accountant since I got the impresion that the lawyer wanted me to hire his services in order to "straighten things out".
I appreciate your thoughts.
Thanks,
Jose

I have some properties mortgaged under my name. Is there any limitations with claiming the mortgage interest as expenses on the LLC tax return? the properties are under my name but the LLC manages all income and expenses.
there are 2 partners in the LLC and I'm 50% owner.
Thanks for your input.

Thanks Steve- I'm fully aware that there will be some risk associated with guarateeing a loan. I need to determine what is my exposure in doing so. If I can limit my exposure to a certain dollar amount then I may be ok with taking the risk if by doing so I'm helping someone obtain a house. I wouldn't do this for any person but I may do it for someone I see is really trying to get back on their feet. I appreciate any suggestions on this topic.

Michael- I've been doing rental properties for a couple of years with good success but I also see a lot of people that have rental properties with no positive cash flow and actually have to come out of pocket every month. There are a number of hidden costs in owning a rental property that I suggest you become very educated before jumping on the wagon. I would suggest owning a rental close to your domicile for numerous reasons. I don't know about the real estate prices in San Diego but in my opinion, 30k is a good amount for a downpayment on a house up to 130k. You can download a profitability spreadsheet from BP to get more familiar with the cost of owning a rental property. In my analysis I consider 11 months of income and use 10% less than the zillow estimate for rental estimate to be on the safe side. After putting all the costs involved in closing the deal and getting the house ready for rent I would consider the deal only if it makes 30% or more on my investment (not total purchase price)

Regarding your question about keeping the money for your primary residence. That is usually a good investment since the rates are so low and you get to deduct the interest on your taxes. I would also put as little down as possible towards the purchase price and save that money for investing if that's what you want to do later on.
Hope it helps. Best of luck!

Thanks Bill- I really appreciate the prompt response and detailed post. I'll talk to a local lender to see if they can put us both on the note and title. I'll just need to talk to my attorney about protection of my assets and credit in case she misses payments. I wouldn't want my credit in jeopardy over helping someone else :)

Thanks Mehran Kamari, Shawn Bowen, Jason Rhine and Andrea M. for making such a warm welcome!I look forward to collaborating with you and interacting in the forums.
Jose

Bill Gulley thanks for the additional information. Are conventional lenders willing to do that or are you talking about HML? Depending on the type of loan, the payment on the mortgage would be considerable less than the current rent so its very advisable for them to do. As an example, one tenant is paying $1050/month for rent to live in a property worth $120k. The monthly payment on a 4%, 30 yr loan including taxes and insurance would be around $740 or 30% less than their current payment.

Regarding the note, I guess I'll need to stay on the note until the tenant refinances again or until they can qualify for the loan by themselves?
I'm investing for profit but I might be willing to that type of loan to help someone out. Thanks for any additional info you can provide.

Pat L. good luck on your deal. Would love to know the details when you work it out.

Bill Gulley thanks for the deep insight into the possible implications. the idea of refinancing and adding the tenant to the title sounds interesting although we'd be limited somehow to 70% of the value of the property, since that's about the ceiling most lender will offer. I hold title personally on the property. Regarding the tenant, she had a prior bankruptcy and some other accounts past due. I'd say it could be all cleaned up after a couple of years for a lender to provide a loan but you never know what changes may come in the lending future.
I could do the lease option and if she doesn't qualify at the end of 3 years I'll have to start over or put the house for sale in the open market. That's what I was trying to avoid but after reading your input its probably the safest route.

Pat L. I'd also be concerned with having an LLC with someone that I have no control about their finances. thanks for sharing your situation.